We set out an analysis of the factors that explain subnational budget balances. Ours results
suggest that long run deficit targets should not be distributed linearly across Autonomus
Communities, and cannot be ... [+]

We set out an analysis of the factors that explain subnational budget balances. Ours results
suggest that long run deficit targets should not be distributed linearly across Autonomus
Communities, and cannot be expected to be fulfilled in the same time-horizon. More
important, financing agreements should be redesigned in order to avoid the central
government having the opportunity to transfer its deficit to Autonomous Communities.
Finally, more budgetary coordination is needed in order to prevent that Autonomous
Communities circumvent central governments fiscal rules using their public entities. [-]